D R A F T M E M O R A N D U M

Transcription

1 D R A F T M E M O R A N D U M To: From: Joe Speaks, CH2M Darin Smith and Matt Loftis Subject: 4th and King RAB Financing Opportunities; EPS # Date: August 18, 2017 Economic & Planning Systems Inc. (EPS) is engaged in a work effort assisting CH2M Hill and the San Francisco Planning Department ( the City ) in evaluating the economic implications and potential financing approaches related to alternate rail alignments as part of the RAB study. EPS has prepared this memorandum in order to show the general order of magnitude of potential financing and fiscal revenues resulting from each RAB alternative. Specifically this document analyzes and quantifies the following: Land value of potential liberated railyard sites. Growth in Assessed Value within ½ mile of each proposed transit station location. These calculations are the basis for any value capture financing mechanisms and apply to: New development on liberated sites at 4th and King. City identified pipeline projects. City identified future soft sites development. Assessed value increase of existing parcels that is attributable to the perceived benefit of HSR station proximity. General Fund fiscal revenue analysis at buildout of the 4th and King site. page D-16

2 4th and King RAB Financing Opportunities Page 2 This analysis compares three different alternatives that vary based on the location of rail stations, and whether or not the existing 4th and King railyard will be liberated for future development. Each of these variations creates different amounts of new development opportunity and serves different amounts of existing and planned development. Table 1 summarizes what each of the three alternatives assumes regarding these factors. As shown, the current Downtown Extension (DTX) plan from TJPA assumes a new station at 4th and Townsend, with the full railyard at 4th and King to remain on the surface. The current DTX plan does not assume any new private development on the existing railyards site. In contrast, the RAB Study s Avenue and alignments assume development of the 4th and King railyard which would be replaced with a new railyard farther south. The Avenue alignment follows the same station location assumptions as the existing DTX plan with a station at 4th and Townsend, while the alignment assumes that the rail will be re-aligned eastward from its current alignment, and that a new station will be constructed at the intersection of 3rd and, as well as a subsurface replacement to the southerly 22nd Street Station within the same Dogpatch area. In each case, EPS has explored the potential for new development on the liberated sites and reviewed with City staff the known pipeline for new development within ½-mile of each station as well as the potential development capacity on underutilized soft sites that are not yet proposed for new projects. Figure 1 provides a visual representation of the station locations and the areas within a ½ mile of each station. The station areas illustrated with blue buffers would apply to both the DTX alternative as well as the Avenue alternative, while the station areas illustrated with grey buffers apply to the alternative. The green lines represent the assumed station locations and likely access points. Table 1 Summary of Land Use Area Assumptions for RAB Alternatives Southerly Station Area Northerly Station Area Railyard Redevelopment Existing DTX Plan 22nd Street 4th / Townsend Not Included Avenue 22nd Street 4th / Townsend Included Dogpatch 3rd / Included page D-17

3 4th and King RAB Financing Opportunities Page 3 Figure 1 Station Location Analysis Assumptions The disposition (sale or lease) of land for development can provide a direct infusion of capital for major infrastructure projects. Table 2 shows the estimated value of the liberated sites under each alternative, based on market data gathered by EPS and prospective development programs provided by the City. The existing DTX alternative will not yield any new land value as it will not result in the liberation of the existing railyard site. However, both RAB alternatives would allow for the disposition of the existing railyards site. EPS estimates the value of this land at approximately $350 million. This analysis does not suggest that the full value of these sites would be available to assist with financing improvements for the rail corridor, but rather compares the gross potential to capture some of the land value for such initiatives. page D-18

4 4th and King RAB Financing Opportunities Page 4 Table 2 Liberated Railyard Sites Land Value Estimates Item Commercial Sq. Ft. Residential Sq. Ft. Residential Units 1 Value per Sq. Ft. Commercial Value Value per Unit Residential Value Total Land Value K1 298,932 $162 $48,418,544 K2 385,394 $162 $62,422,815 K3 286,781 $162 $46,450,398 K4 407,675 $162 $66,031,743 T1 8, , $127 $1,129,471 $77,500 $8,058,159 T2 11, , $127 $1,456,155 $77,500 $10,388,875 T3 11, , $127 $1,511,284 $77,500 $10,782,188 T4 11, , $127 $1,511,284 $77,500 $10,782,188 T5 33, , $127 $4,191,967 $77,500 $29,907,403 4th/King Tower 6, , $127 $792,077 $77,500 $47,929,915 Total 1,462,362 1,824,755 1,521 $233,915,738 $117,848,728 $351,764,466 [1] This analysis assumes 1,200 gross square feet per unit [2] Average price per buildable commercial sq.ft. in the category 1-5 FAR is $127 and for 5+ FAR is $162. Tax increment generated by new development can provide a source of public financing for major infrastructure projects. As such, it is instructive to estimate the extent to which new development is anticipated in the rail station areas under each alternative. Table 3 estimates the full assessed value (not just the land value) associated with the buildout of the liberated sites, while Table 4 estimates the assessed value of new development currently in the City s pipeline within a ½ mile around each previously identified station location. As shown, the development pipeline around 3rd and is expected to yield significantly greater gains in assessed value than is the pipeline around 4th and Townsend. 1 Table 5 further estimates the potential for additional development beyond those projects currently in the City s pipeline by assigning a future increment of development to each of the significantly underutilized soft site properties identified by the City. This table illustrates that there is a great deal of currently unmet development potential in the study s northerly station locations, particularly within a half mile of the 4th and Townsend station. Figures shown on Tables 5 and 6 reflect the net change in each land use category under the assumption that soft sites redevelop for other uses. Table 5 illustrates unmet development potential under the City s current ordinance and known near term zoning changes and is assumed to be realized by the year The City also provided soft sites data beyond the year 2040 for sites that would require rezoning. These sites are summarized on Table 6 but EPS has not assumed that the development and associated value on these sites would be available to support the RAB construction due to their speculative nature and the fact that funding would be required prior to Note that on Table 4, there are some land use categories that show negative development, indicating that those uses are assumed to be removed or converted to allow for the other uses to be developed. For example, in all study areas, there is assumed to be a net loss of PDR ( Production, Distribution and Repair ) space even as other uses grow. page D-19

5 4th and King RAB Financing Opportunities Page 5 In addition to new development, existing development may also benefit from the introduction of HSR service and facilities and may represent a value capture opportunity. Table 7 compares these opportunities by assuming that existing properties within 1/2 mile of each station location may realize assessed value increases of 10 percent when HSR service commences. EPS considers this figure to be conservative because research from around the world suggests major rail infrastructure tends to have demonstrably positive impacts on property values, and the assessed value of existing properties in San Francisco (and throughout California) are artificially low due to the limitations of Proposition 13. However, this study area is already served by significant transit, so the net impact may be somewhat muted compared to a situation where transit is newly introduced. Table 3 4th & King Railyard Liberated Sites Development Program and Value Estimate Item Value per Unit / Sq. Ft. Liberated Railyard Sites Development Program Residential Units 1,521 Residential Market Rate 1,140 Residential - BMR MIPS 1,318,835 Retail 143,527 Assessed Value Estimate Residential Units $850,000 $969,400,828 MIPS $764 $1,007,590,227 Retail 2 $626 $89,847,667 Total AV Estimate 2017$ $2,066,838,722 [1] Consistent with San Francisco's inclusionary housing requirement for 25+ unit residential projects, this analysis assumes 25% of units will be rented at a "below market rate" (BMR) price. [2] Represents a blended value / sq. ft. figure that consists of both neighborhood and regional retail orientations. page D-20

6 4th and King RAB Financing Opportunities Page 6 Table 4 Pipeline Development and Summary Location Land Use Residential 1 Medical MIPS PDR Retail CIE 2 Visitor Total Half mile radius of 4th / Townsend Station Total Development Program 3, ,687 (30,858) 168, , ,625 Unmet Assessed Value $2,902,920,000 $0 $733,964,868 -$15,807,751 $105,715,124 $0 $390,470,625 $4,117,262,866 Half mile radius of 3rd & Station Total Development Program 4,056 2,606,902 3,807,008 (143,250) 272,850 1,528, ,125 Unmet Assessed Value $3,447,600,000 $1,991,673,128 $2,908,554,112 -$73,383,251 $170,804,100 $0 $354,385,125 $8,799,633,215 Half mile radius of 22nd Street Total Development Program 2,476-37,522 (389,122) (1,029) - - Unmet Assessed Value $2,104,600,000 $0 $28,666,808 -$199,337,083 -$644,154 $0 $0 $1,933,285,571 Half mile radius of Dogpatch Station Total Development Program 1,698 - (8,989) (369,997) (16,350) - - Unmet Assessed Value $1,443,640,000 $0 -$6,867,596 -$189,539,843 -$10,235,100 $0 $0 $1,236,997,461 [1] Development program is shown in # of units. Only market rate units are being shown, BMR units are tax exempt and therefore will not contribute to assessed value increases. [2] EPS is assuming CIE space will carry no assessed value. Source: City of San Francisco, Planning Department; Economic & Planning Systems, Inc. page D-21

7 4th and King RAB Financing Opportunities Page 7 Table 5 Short Term Soft Sites Development Capacity and Summary 2 Location Land Use Residential 1 Medical MIPS PDR Retail CIE 2 Visitor Total Half mile radius of 4th / Townsend Station Total Short Term Development Capacity 13,065 84,322 8,991, ,844 2,532, ,192 63,133 Unmet Short Term Assessed Value $8,884,200,000 $64,422,008 $6,869,346,324 $112,108,091 $1,585,488,354 $0 $46,023,957 $17,561,588,734 Half mile radius of 3rd & Station Total Short Term Development Capacity 3,040 5,090 1,869, , ,897 30,509 4,860 Unmet Short Term Assessed Value $2,067,200,000 $3,888,760 $1,428,656,316 $154,817,399 $286,017,522 $0 $3,542,940 $3,944,122,937 Half mile radius of 22nd Street Total Short Term Development Capacity 4,204 35, , , ,755 82,424 35,026 Unmet Short Term Assessed Value $2,858,720,000 $26,759,864 $188,645,352 $348,022,051 $126,924,630 $0 $25,533,954 $3,574,605,851 Half mile radius of Dogpatch Station Total Short Term Development Capacity 4,564 35,026 1,586, , ,154 82,424 35,026 Unmet Short Term Assessed Value $3,103,520,000 $26,759,864 $1,212,273,180 $333,844,868 $268,024,404 $0 $25,533,954 $4,969,956,270 [1] Development program is shown in # of units. BMR units are tax exempt and therefore will not contribute to assessed value increases. [2] EPS is assuming CIE space will carry no assessed value. [3] Long term development potential is speculative and is based on the discrepancy between a parcel's existing development condition and a potentially allowable future rezoning. Source: City of San Francisco, Planning Department; Economic & Planning Systems, Inc. 2 Short term soft sites are those that have additional unmet development potential under either the existing zoning, zoning changes that are now known to be likely. Discussions with City staff indicated that the timeframe for such development to meet its current zoning potential should be assumed to be on or before page D-22

8 4th and King RAB Financing Opportunities Page 8 Table 6 Long Term Soft Sites Development Capacity and Summary 3 Location Land Use Residential 1 Medical MIPS PDR Retail CIE 2 Visitor Total Half mile radius of 4th / Townsend Station Total Long Term Development Capacity 3 3,046-1,798, ,988 95, Unmet Long Term Assessed Value $2,071,280,000 $0 $1,373,972,252 $493,313,715 $59,470,000 $0 $0 $3,998,035,967 Percent Discounted 100% 100% 100% 100% 100% 100% 100% 100% Total Long Term AV Capture $0 $0 $0 $0 $0 $0 $0 $0 Half mile radius of 3rd & Station Total Long Term Development Capacity 3 1, ,402 5,169,076 18, Unmet Long Term Assessed Value $844,560,000 $616,091,128 $3,949,174,064 $9,260,889 $5,419,086,081 Percent Discounted 100% 100% 100% 100% 100% 100% 100% 100% Total Long Term AV Capture $0 $0 $0 $0 $0 $0 $0 $0 Half mile radius of 22nd Street Total Long Term Development Capacity Unmet Long Term Assessed Value $0 $0 $0 $0 $0 $0 Percent Discounted 100% 100% 100% 100% 100% 100% 100% 100% Total Long Term AV Capture $0 $0 $0 $0 $0 $0 $0 $0 Half mile radius of Dogpatch Station Total Long Term Development Capacity 3 1, , , , Unmet Long Term Assessed Value $1,063,520,000 $0 $611,200,000 $53,090,028 $137,720,000 $0 $0 $0 Percent Discounted 100% 100% 100% 100% 100% 100% 100% 100% Total Long Term AV Capture $0 $0 $0 $0 $0 $0 $0 $0 [1] Development program is shown in # of units. BMR units are tax exempt and therefore will not contribute to assessed value increases. [2] EPS is assuming CIE space will carry no assessed value. [3] Long term development potential is speculative and is based on the discrepency between a parcel's existing development condition and a potentially allowable future rezoning. Source: City of San Francisco, Planning Department; Economic & Planning Systems, Inc. 3 These sites are not currently considered soft but could be in the future if the City were to undergo a rezoning process. Conversations with City staff indicated that they timeframe for these sites meeting their future unmet development potential is page D-23

9 4th and King RAB Financing Opportunities Page 9 Table 7 Existing AV and Estimated Value Growth Attributable to HSR Investment Item Existing DTX Plan Existing Taxable Use Within 1/2 Mile of Station Areas 1 Residential Units 14,365 14,365 8,638 CIE Sq. Ft. 1,126,154 1,126, ,753 MED Sq. Ft. 415, , ,325 MIPS Sq. Ft. 5,928,499 5,928,499 2,289,399 Retail Sq. Ft. 1,980,849 1,980, ,218 PDR Sq. Ft. 4,017,551 4,017,551 2,328,679 Visitor Sq. Ft. 38,067 38,067 5,219 Total Commercial Sq. Ft. 2 13,507,042 13,507,042 6,420,593 Total Existing Assessed Value $11,518,072,139 $11,518,072,139 $7,733,562,950 Value Growth due to HSR Proximity (10%) $1,151,807,214 $1,151,807,214 $773,356,295 [1] Existing land use programs do not include tax exempt space as these properties will not yield tax gains. [2] Commercial Square Feet is not inclusive of residential units. Source: San Francisco Parcel Database, April Table 8 on the following page combines the assessed value estimates associated with new development on the liberated sites, pipeline development, and soft sites attributable to each rail alternative. As shown, the 3rd and station alternative (as part of the alignment) has the lowest amount of potential assessed value gains, while the Avenue alignment has the greatest such value gains. The difference between the existing DTX plan alternative and the Avenue alternative is the value of potentially liberated railyards sites. page D-24

10 4th and King RAB Financing Opportunities Page 10 Table 8 Summary of Total New Development Values by RAB Alternative Land Use Value/ Unit or Sq. Ft. Existing DTX Plan Ave. Dev. Program 1 AV Estimate Dev. Program 2 AV Estimate Dev. Program 3 AV Estimate Residential Market Rate $850,000 19,706 $16,750,440,000 20,847 $17,719,840,828 12,978 $11,031,360,828 BMR 5 $0 4,308 $0 4,688 $0 3,340 $0 Subtotal - 24,014 $16,750,440,000 25,535 $17,719,840,828 16,318 $11,031,360,828 Commercial MED $ ,348 $91,181, ,348 $91,181,872 2,647,018 $2,022,321,752 MIPS $764 10,236,418 $7,820,623,352 11,555,253 $8,828,213,579 8,573,568 $6,550,206,239 PDR $ ,231 $244,985, ,231 $244,985, ,661 $225,739,173 RETAIL $626 2,903,329 $1,817,483,954 3,046,856 $1,907,331,621 1,285,078 $804,458,593 VISITOR $ ,784 $462,028, ,784 $462,028, ,011 $383,462,019 Subtotal - 14,371,110 $10,436,303,021 15,833,472 $11,533,740,915 13,472,336 $9,986,187,776 Existing AV Growth (10%) 4 $1,151,807,214 $1,151,807,214 $773,356,295 Total Future AV Estimate $28,338,550,235 $30,405,388,957 $21,790,904,899 [1] Includes pipeline projects and short term soft sites within 1/2 mile of Existing 4th / Townsend Station and future Ave. Station [2] Includes development on liberated railyard sites and pipeline projects and short term soft sites within 1/2 mile of 4th / Townsend and Ave. Station [3] Includes development on liberated railyard sites and pipeline projects and short term soft sites within 1/2 mile of and Dogpatch Stations. [4] Assuming Investment in HSR will increase existing AV by 10%. page D-25

11 4th and King RAB Financing Opportunities Page 11 In addition to the existing taxable space located within a half mile radius of our identified station areas, there are also significant existing developments located within these areas that are not on the City of San Francisco s property tax rolls. Specifically, the University of California San Francisco (UCSF) owns and occupies millions of square feet of development within the area. While this space is excluded from the existing assessed value calculations in Table 8, it is shown in Table 9 below to illustrate additional existing development that will benefit from proximity to HSR. If the City and UCSF were to enter an agreement for Payment in Lieu of Taxes (PILOT), the terms of such agreements could substantially increase the funding potentially available for RAB projects. No such PILOT agreements have been assumed in this analysis. Table 9 Existing UCSF Space within Item Existing Program UCSF Existing Space within Residential Units 743 CIE Sq. Ft. 1,497,000 MED Sq. Ft. - MIPS Sq. Ft. 2,490,980 Retail Sq. Ft. 14,600 PDR Sq. Ft. - Visitor Sq. Ft. - Total Commercial Sq. Ft. 2 4,002,580 Total Existing Assessed Value $0 To gauge the amount of newly generated public revenue that might be available to assist in the financing of the HSR, EPS has prepared a fiscal revenue analysis of the proposed development on the liberated 4th and King Railyards sites. No fiscal revenues are being estimated for the existing DTX alternative, as this alternative does not involve the liberation of the 4th and King Railyards. While this fiscal analysis did use a case study approach to determine major revenue sources such as Property Tax, and Sales and Use Tax, many of the other tax revenues were calculated on an average revenue basis, either per worker or per resident equivalent. Table 10 documents the existing population within the City of San Francisco as well as the projected population increase stemming from new development within each of the RAB Alternatives. Projected population increases are based on the future development program of the liberated Railyards site, and Table 11 shows the population density assumptions for each use. page D-26

12 4th and King RAB Financing Opportunities Page 12 Table 10 Summary of Residential Equivalents by RAB Alternative Item Total Resident Equivalent Weighting Factor Resident Equivalents Resident Equivalent Items San Francisco Residents 845, ,602 Jobs 704,000 (less) Jobs held by Residents (370,000) Non-Resident Employees 334, ,000 Daily Visitors 77, ,740 Total Daily Population 1,257,342 1,090,342 Existing DTX Plan Residents Jobs 0 Non-Resident Employees Total 0 0 Alternative Residents 3, ,528 Jobs 5,188 Non-Resident Employees 2, ,231 Total 5,989 4,759 Alternative Residents 3, ,528 Jobs 5,188 Non-Resident Employees 2, ,231 Total 5,989 4,759 Source: California Department of Finance; United States Census Bureau; EPS. page D-27

13 4th and King RAB Financing Opportunities Page 13 Table 11 Population Density Assumptions Item Population Density Residential 1 Commercial 2 MED MIPS PDR RETAIL VISITOR CIE 2.32 Per Household 350 Sq. Ft. per Job 276 Sq. Ft. per Job 567 Sq. Ft. per Job 350 Sq. Ft. per Job 700 Sq. Ft. per Job 350 Sq. Ft. per Job [1] Source: U.S. Census Bureau, American Community Survey 5-Year Estimates [2] Employment density estimates provided by City of San Francisco. As shown on Table 12, the fiscal revenues associated with the liberated railyards development at buildout are approximately $18.8 million annually in year 2017 dollars. Please note that these calculations are for fiscal revenues only, and thus estimate the gross revenues associated with the new development under each alternative. Based on a City suggestion, EPS has estimated that 75 percent of these gross fiscal revenues could be available to fund rail-related infrastructure, while the other 25 percent would be needed to fund City services to the development (Police, Fire, etc.) At this rate, an estimated $14.1 million might be available annually once the railyards site is fully developed. Table 13 translates these fiscal revenues into annualized figures and calculates the total bond potential in 2026 dollars over the 20-year time period from 2021 to EPS estimates that the fiscal revenues from new development on the railyards sites will support roughly $235 million in bonding capacity in year 2026 dollars. page D-28

14 4th and King RAB Financing Opportunities Page 14 Table 12 Fiscal Revenue Analysis by RAB Alternative at Buildout Item GF Revenue Allocation Method Existing DTX Plan Business Taxes 1 $669,450,000 $951 per employee $0 $4,933,832 $4,933,832 Hotel Room Tax $409,250,000 not estimated $0 $0 $0 Other Local Taxes $46,960,000 not estimated Stadium Admission Tax $1,360,000 not estimated Parking Tax $92,820,000 $85 per resident equivalent 3 $0 $405,100 $405,100 Property Transfer Tax $235,000,000 Case Study 4 $0 $838,167 $838,167 Sales and Use Tax $237,545,000 Case Study 5 $0 $574,107 $574,107 Gas Electric Steam Users Tax $45,550,000 $42 per resident equivalent 3 $0 $198,797 $198,797 Telephone Users Tax $44,440,000 $41 per resident equivalent 3 $0 $193,952 $193,952 Water Users Tax $4,320,000 $4 per resident equivalent 3 $0 $18,854 $18,854 Property Tax $1,412,000,000 See Table 8 $0 $11,509,295 $11,509,295 Charges for Service $236,101,725 not estimated Expenditure Recovery $421,085,839 not estimated Fines, Forfeitures & Penalties $4,579,750 $4 per resident equivalent 3 $0 $19,988 $19,988 Interest & Investment Income $13,969,863 not estimated Intergovernmental Transfers $959,099,074 not estimated General Fund Support ($640,803,508) not estimated Other Transfers In* $686,132,452 not estimated License, Permits, and Franchises $28,876,499 $26 per resident equivalent 3 $0 $126,027 $126,027 Other Financing Sources $881,000 not estimated Other Revenues $61,333,621 not estimated Rents and Concessions $16,140,178 not estimated Transfer Adjustments -$15,162,070 not estimated Unappropriated Fund Balance $178,109,083 not estimated Transfer Adjustments Citywide ($1,234,113,727) not estimated Total General Fund Revenues 2017$ $3,914,924,779 $0 $18,818,118 $18,818,118 Potentially Available for RAB Financing 6 75% $0 $14,113,589 $14,113,589 * Includes Intrafund transfers in as well as operating transfers in [1] Includes Gross Receipts Tax, Payroll Tax, Administrative Office Tax, and Business Registration Tax [2] Based on average room rate of $255/night and 30% vacancy [3] Resident equivalent includes City of San Francisco residents, and considers employee and visitor impact to be half that of a full-time resident [4] Based on a residential turnover rate of 7% and a commercial turnover rate of 4% [5] Based on $400 of taxable sales per net new retail square footage. [6] Assuming 75 percent of fiscal revenues will be available for RAB financing, and 25 percent will be set aside for the General Fund. Source: City and County of San Francisco; Economic and Planning Systems, Inc. page D-29

15 4th and King RAB Financing Opportunities Page 15 Table 13 Annualized Railyard Site Development Fiscal Benefit Bonding Potential Year Annual Fiscal Revenues 2017$ Nominal Fiscal Revenues Bonding Capacity in Nominal Dollars 1 Total Bond Capacity in 2026$ Existing DTX Plan Existing DTX Plan Existing DTX Plan Existing DTX Plan $705,679 $705,679 - $794,248 $794,248 - $7,942,484 $7,942,484 - $9,207,516 $9,207, $1,411,359 $1,411,359 - $1,636,152 $1,636,152 - $8,419,033 $8,419,033 - $9,475,696 $9,475, $2,117,038 $2,117,038 - $2,527,854 $2,527,854 - $8,917,027 $8,917,027 - $9,743,876 $9,743, $2,822,718 $2,822,718 - $3,471,587 $3,471,587 - $9,437,323 $9,437,323 - $10,012,056 $10,012, $3,528,397 $3,528,397 - $4,469,668 $4,469,668 - $9,980,812 $9,980,812 - $10,280,236 $10,280, $4,234,077 $4,234,077 - $5,524,510 $5,524,510 - $10,548,417 $10,548,417 - $10,548,417 $10,548, $4,939,756 $4,939,756 - $6,638,619 $6,638,619 - $11,141,095 $11,141,095 - $10,816,597 $10,816, $5,645,436 $5,645,436 - $7,814,603 $7,814,603 - $11,759,840 $11,759,840 - $11,084,777 $11,084, $6,351,115 $6,351,115 - $9,055,171 $9,055,171 - $12,405,682 $12,405,682 - $11,352,957 $11,352, $7,056,794 $7,056,794 - $10,363,141 $10,363,141 - $13,079,692 $13,079,692 - $11,621,137 $11,621, $7,762,474 $7,762,474 - $11,741,438 $11,741,438 - $13,782,977 $13,782,977 - $11,889,317 $11,889, $8,468,153 $8,468,153 - $13,193,107 $13,193,107 - $14,516,687 $14,516,687 - $12,157,497 $12,157, $9,173,833 $9,173,833 - $14,721,309 $14,721,309 - $15,282,016 $15,282,016 - $12,425,677 $12,425, $9,879,512 $9,879,512 - $16,329,328 $16,329,328 - $16,080,199 $16,080,199 - $12,693,857 $12,693, $10,585,192 $10,585,192 - $18,020,580 $18,020,580 - $16,912,519 $16,912,519 - $12,962,037 $12,962, $11,290,871 $11,290,871 - $19,798,611 $19,798,611 - $17,780,306 $17,780,306 - $13,230,217 $13,230, $11,996,551 $11,996,551 - $21,667,105 $21,667,105 - $18,684,939 $18,684,939 - $13,498,397 $13,498, $12,702,230 $12,702,230 - $23,629,889 $23,629,889 - $19,627,848 $19,627,848 - $13,766,578 $13,766, $13,407,909 $13,407,909 - $25,690,941 $25,690,941 - $20,610,515 $20,610,515 - $14,034,758 $14,034, $14,113,589 $14,113,589 - $27,854,389 $27,854,389 - $21,634,477 $21,634,477 - $14,302,938 $14,302,938 Total $0 $148,192,683 $148,192,683 $0 $244,942,250 $244,942,250 $0 $278,543,886 $278,543,886 $0 $235,104,538 $235,104,538 [1] This accounts for the net new fiscal revenues in a given year and thus subtracts the fiscal revenues accrued in previous years. Bonding capacity is estimated at 10x the annual net fiscal impact in a given year. page D-30

16 4th and King RAB Financing Opportunities Page 16 Table 14 below provides an overview of the assessed value growth that may be seen under each alternative, as well as the tax revenues that would be generated for the City and County of San Francisco. This table takes into account new pipeline development, new development on liberated sites, new value from underdeveloped soft sites, and potential value growth of parcels due to proximity of a HSR station area. The Avenue alternative would produce the largest assessed value growth and thus the largest share of new annual tax increment to San Francisco. Table 14 Tax Increment Estimates (Gross and Portion Attributed to Rail, 2017$) Tax Increment Sources Existing DTX Plan Liberated Railyards Development Value N/A $2,066,838,722 $2,066,838,722 Non-Railyards AV Increases New Value from Pipeline Development Base Value of Pipeline Projects 1 $6,050,548,436 $6,050,548,436 $10,036,630,675 Value Premium Attributed to Rail (5%)* $302,527,422 $302,527,422 $501,831,534 Subtotal $6,353,075,858 $6,353,075,858 $10,538,462,209 Soft Sites Development Market Value Base Value of Soft sites Projects 1 $21,136,194,585 $21,136,194,585 $8,914,079,207 Value Premium Attributed to Rail (5%)* $1,056,809,729 $1,056,809,729 $445,703,960 Subtotal $22,193,004,314 $22,193,004,314 $9,359,783,167 Existing AV Growth Attributed to Rail * $1,151,807,214 $1,151,807,214 $773,356,295 Subtotal Non-Railyards AV Increase Attributed to Rail 2 $2,511,144,365 $2,511,144,365 $1,720,891,789 Total AV Increase Attributed to Rail $2,511,144,365 $4,577,983,087 $3,787,730,511 [1] It is assumed that the base value of pipeline and soft sites will be realized regardless of station area locations. [2] Non-railyard AV growth attributed to rail is inclusive of all line items marked with an * Source: City of San Francisco Planning Department; Economic & Planning Systems, Inc. Table 15 annualizes the assessed value increase attributed to rail that is calculated in Table 14 above. This additional annual tax increment is then used to estimate the total bonding capacity associated with new property tax proceeds. Using linear growth projections, EPS estimates that a bond of $251 million could be issued against future AV growth attributed to rail in either the DTX or alternative. The alternative would be able to yield a bond of $146 million. These figures are shown in Year 2026 dollars to match the timeframe being used by CH2M Hill and the City to estimate RAB development costs. page D-31

17 4th and King RAB Financing Opportunities Page 17 Table 15 Annualized Property Tax Increment Bonding Potential (Exclusive of Liberated Railyard Sites) Year Unadjusted AV Growth 2017$ 1 Cumulative Nominal AV Growth 2 Annual Tax Increment 3 Existing DTX Plan Existing DTX Plan Existing DTX Plan Bonding Capacity Nominal Dollars 4 Existing DTX Plan 2021 $125,557,218 $125,557,218 $86,044,589 $141,315,755 $141,315,755 $96,843,943 $786,924 $786,924 $539,281 $7,869,244 $7,869,244 $5,392, $125,557,218 $125,557,218 $86,044,589 $289,697,298 $289,697,298 $198,530,084 $1,613,195 $1,613,195 $1,105,526 $8,262,706 $8,262,706 $5,662, $125,557,218 $125,557,218 $86,044,589 $445,413,129 $445,413,129 $305,242,425 $2,480,307 $2,480,307 $1,699,759 $8,671,120 $8,671,120 $5,942, $125,557,218 $125,557,218 $86,044,589 $608,740,933 $608,740,933 $417,171,266 $3,389,807 $3,389,807 $2,323,041 $9,094,997 $9,094,997 $6,232, $125,557,218 $125,557,218 $86,044,589 $779,967,879 $779,967,879 $534,513,403 $4,343,293 $4,343,293 $2,976,467 $9,534,865 $9,534,865 $6,534, $125,557,218 $125,557,218 $86,044,589 $959,390,928 $959,390,928 $657,472,344 $5,342,420 $5,342,420 $3,661,170 $9,991,270 $9,991,270 $6,847, $125,557,218 $125,557,218 $86,044,589 $1,147,317,149 $1,147,317,149 $786,258,524 $6,388,898 $6,388,898 $4,378,323 $10,464,773 $10,464,773 $7,171, $125,557,218 $125,557,218 $86,044,589 $1,344,064,046 $1,344,064,046 $921,089,529 $7,484,493 $7,484,493 $5,129,137 $10,955,957 $10,955,957 $7,508, $125,557,218 $125,557,218 $86,044,589 $1,549,959,898 $1,549,959,898 $1,062,190,330 $8,631,036 $8,631,036 $5,914,864 $11,465,422 $11,465,422 $7,857, $125,557,218 $125,557,218 $86,044,589 $1,765,344,104 $1,765,344,104 $1,209,793,517 $9,830,414 $9,830,414 $6,736,801 $11,993,786 $11,993,786 $8,219, $125,557,218 $125,557,218 $86,044,589 $1,990,567,544 $1,990,567,544 $1,364,139,549 $11,084,583 $11,084,583 $7,596,285 $12,541,689 $12,541,689 $8,594, $125,557,218 $125,557,218 $86,044,589 $2,225,992,950 $2,225,992,950 $1,525,477,007 $12,395,562 $12,395,562 $8,494,701 $13,109,791 $13,109,791 $8,984, $125,557,218 $125,557,218 $86,044,589 $2,471,995,286 $2,471,995,286 $1,694,062,854 $13,765,439 $13,765,439 $9,433,481 $13,698,773 $13,698,773 $9,387, $125,557,218 $125,557,218 $86,044,589 $2,728,962,142 $2,728,962,142 $1,870,162,707 $15,196,373 $15,196,373 $10,414,102 $14,309,338 $14,309,338 $9,806, $125,557,218 $125,557,218 $86,044,589 $2,997,294,144 $2,997,294,144 $2,054,051,115 $16,690,595 $16,690,595 $11,438,095 $14,942,213 $14,942,213 $10,239, $125,557,218 $125,557,218 $86,044,589 $3,277,405,370 $3,277,405,370 $2,246,011,846 $18,250,409 $18,250,409 $12,507,038 $15,598,145 $15,598,145 $10,689, $125,557,218 $125,557,218 $86,044,589 $3,569,723,779 $3,569,723,779 $2,446,338,182 $19,878,200 $19,878,200 $13,622,567 $16,277,909 $16,277,909 $11,155, $125,557,218 $125,557,218 $86,044,589 $3,874,691,667 $3,874,691,667 $2,655,333,229 $21,576,430 $21,576,430 $14,786,367 $16,982,302 $16,982,302 $11,638, $125,557,218 $125,557,218 $86,044,589 $4,192,766,114 $4,192,766,114 $2,873,310,224 $23,347,645 $23,347,645 $16,000,183 $17,712,148 $17,712,148 $12,138, $125,557,218 $125,557,218 $86,044,589 $4,524,419,468 $4,524,419,468 $3,100,592,870 $25,194,475 $25,194,475 $17,265,819 $18,468,296 $18,468,296 $12,656,357 Total $2,511,144,365 $2,511,144,365 $1,720,891,789 $4,524,419,468 $4,524,419,468 $3,100,592,870 $227,670,499 $227,670,499 $156,023,006 $251,944,746 $251,944,746 $172,658,191 Total Bonding Capacity ( ) in 2026$ $214,226,338 $214,226,338 $146,809,698 [1] These values include AV growth attributed to rail service among pipeline projects, near-term soft sites, and existing properties (see Table 13). [2] Assumes that newly constructed development values increase by 3% annually but that once built, AV appreciation is capped at 2 percent, consistent with California Proposition 13. [3] Assumes a 1% property tax rate and a General Fund share of 55.68% per City instruction. [4] Bonding capacity is estimated at 10x the annual net fiscal impact in a given year. page D-32

18 4th and King RAB Financing Opportunities Page 18 A special tax district may be created within the geography of the liberated Railyard site in order to capture additional revenue to offset the costs associated with each RAB alternative. For illustrative purposes, EPS assumes that the total future assessed value of the liberated Railyards site may be subject to additional property tax equal to.1 percentage points. Table 16 documents EPS s estimates of potential special tax proceeds. Table 16 Railyard Sites Land Secured Financing Year Liberated Development Phasing Value Cumulative Unadjusted 2017$ Nominal $ Nominal Annual AV $ 1 Annual Special Tax 2 Incremental Special Tax Bonding Capacity 2017 $0 $0 $0 $0 $ $0 $0 $0 $0 $ $0 $0 $0 $0 $ $0 $0 $0 $0 $ $103,341,936 $116,312,260 $116,312,260 $116,312 $1,163, $103,341,936 $119,801,627 $238,440,132 $238,440 $1,221, $103,341,936 $123,395,676 $366,604,611 $366,605 $1,281, $103,341,936 $127,097,546 $501,034,249 $501,034 $1,344, $103,341,936 $130,910,473 $641,965,407 $641,965 $1,409, $103,341,936 $134,837,787 $789,642,502 $789,643 $1,476, $103,341,936 $138,882,921 $944,318,273 $944,318 $1,546, $103,341,936 $143,049,408 $1,106,254,047 $1,106,254 $1,619, $103,341,936 $147,340,890 $1,275,720,018 $1,275,720 $1,694, $103,341,936 $151,761,117 $1,452,995,536 $1,452,996 $1,772, $103,341,936 $156,313,951 $1,638,369,397 $1,638,369 $1,853, $103,341,936 $161,003,369 $1,832,140,154 $1,832,140 $1,937, $103,341,936 $165,833,470 $2,034,616,427 $2,034,616 $2,024, $103,341,936 $170,808,474 $2,246,117,230 $2,246,117 $2,115, $103,341,936 $175,932,729 $2,466,972,304 $2,466,972 $2,208, $103,341,936 $181,210,710 $2,697,522,460 $2,697,522 $2,305, $103,341,936 $186,647,032 $2,938,119,941 $2,938,120 $2,405, $103,341,936 $192,246,443 $3,189,128,783 $3,189,129 $2,510, $103,341,936 $198,013,836 $3,450,925,194 $3,450,925 $2,617, $103,341,936 $203,954,251 $3,723,897,949 $3,723,898 $2,729,728 Total $2,066,838,722 $3,125,353,971 $3,723,897,949 $33,651,097 $37,238,979 Total Bonding Capacity ( ) in 2026$ $31,663,967 [1] Assumes that newly constructed development values increase by 3% annually but that once built, AV appreciation is capped at 2 percent, consistent with California Proposition 13. [2] Based on a potential special tax of.1% of property value. This analysis is designed to help better understand the potential financing capacity associated with each RAB alternative. As such, EPS has prepared the below summary table, Table 17, to compare the potential bonding capacity for each RAB alternative. As shown, the Existing DTX alternative would yield the smallest potential bond. EPS estimates the size of this bond to be $214 million in 2026 dollars. Alternatively, the and could support bonds of $480 million and $413 million respectively. While not page D-33

19 4th and King RAB Financing Opportunities Page 19 definitive, these considerations should be taken into account along with operational and construction issues to help determine which alternative is most appropriate. Table 17 Comparison of Total Bonding Capacity by Alternative, 2026$ Item Existing DTX Plan Railyard Development Tax Increment $235,104,538 $235,104,538 Adjacent Property Increased Value $214,226,338 $214,226,338 $146,809,698 Annual Land Secured Financing - CFD $0 $31,663,967 $31,663,967 Potential Total Bonding Capacity $214,226,338 $480,994,844 $413,578,204 page D-34